8/06/2009 @ 6:00PM

Use Bribes to Stay Healthy

Can companies save money by paying people to lose weight or quit smoking?

Try as he might, Stanley Kardell just couldn’t lose 20 more pounds–until he got bribed for doing so. His employer offers quarterly payments for those who lose weight and keep it off– $4 for every 1% of body weight lost and kept off–plus diet and exercise tips and team contests. Kardell did more bicycle riding, cut down on red meat and got his weight down from 208 pounds to 187.

“The incentives definitely kept me going,” says Kardell, 62. It has paid off for his employer, Rockford Acromatic Products, too: Kardell’s cholesterol has gone down so much that he no longer needs Lipitor. That drug costs $1,000 a year, versus the $300 in incentives he earns annually. Rockford, with 80 employees, credits the program (run by New Hampshire’s Tangerine Wellness) with helping keep its health costs flat over the last four years.

It may not be Obamacare, but paying people to change unhealthy behaviors could put a dent in health costs.
Hewitt Associates
‘ Mark Bukowski estimates that 80% of big companies now offer financial incentives for participating in wellness programs, up from 40% three years ago. The logic is that paying small amounts of money now could nudge people into healthier habits and avert far bigger medical claims in the future. Obese adults rack up $1,400 more in yearly medical expenses than thin ones, one study found.

Americans are “good consumers of health care and bad consumers of health,” says Kyle Rolfing, chief executive of venture-backed RedBrick Health in Minneapolis, Minn., which runs wellness programs for retailer
Target
and nine other clients. “People shop around for an mri. They buy the generic drug. Then they get in their car, light a cigarette and drive through
McDonald’s
and supersize it.” RedBrick’s program gives employees a few hundred bucks (off their premium or on a reward card) for completing weight loss, exercise and quit-smoking programs. Ridgeview Medical Center near Minneapolis says RedBrick, along with a campuswide smoking ban, helped cut in half the fraction of its 1,300 workers who smoke.

So far, incentives have mostly been small change–say, $50 for filling out a health-risk survey. But some involve sharply lower premiums and deductibles for those willing to get healthier. A new UnitedHealthcare plan gives workers up to $2,000 off their deductibles for meeting weight, cholesterol, blood pressure and nonsmoking benchmarks.
Johnson & Johnson
workers get $500 off their premium for completing a health assessment and counseling if needed.

With incentives “you are raising the price of vice and lowering the price of virtue–if you want to call it a bribe, go ahead,” says Yale economist Dean Karlan. Immediate payoffs can be particularly motivating, adds Carnegie Mellon economist George Loewenstein. The prospect of a fast payout activates the brain’s limbic system, involved in emotion and reward, brain scanning studies have found; payoffs far in the future mainly stimulate areas involved in rational thought.

In one trial, cocaine addicts rewarded with a voucher for each clean urine test–starting at $2.50 and escalating–were more than twice as likely to stay clean. A study (published in The New England Journal of Medicine) of 878
General Electric
workers by University of Pennsylvania internist and economist Kevin Volpp found that paying smokers $750 to quit and stay off tripled the long-term success rate, to 14.7%. Another study from Volpp and Loewenstein found that daily $10 lottery prizes helped more people reach their weight-loss goals. But UnitedHealthcare Chief Medical Officer Sam Ho says that incentives to spur healthy habits have produced “relatively mixed” results so far. “This is a grand experiment,” he says. “We know more about what doesn’t work than what does.”

If you think money will motivate you, blackmail yourself at StickK.com, founded by economist Karlan and two others. You create a contract to give away money to a person or charity if you don’t make your goal.